Three reasons, ignored by pharma, that could explain its predicted decline (or, a study of the blindingly obvious).
A piece appeared in LinkedIn last week, entitled ‘Pharma’s broken business model: An industry on the brink of terminal decline.’ The contention is that the pharmaceutical industry is broken beyond repair and will slide into inexorable oblivion. The reasons? Well, reading between the lines to some extent, the problems are that discovery and development simply can’t guarantee the previously enjoyed ROI: too expensive to create new products, lowering payment/value levels, and payer questions about the benefits products actually deliver.
Subsequent comments tended to agree with the suggestion and didn’t really offer any prospects for the 000s of people who work in the industry, beyond the blind hope that pharma companies may combine with non-pharma players to extend their lifecycles.
I don’t claim to have particular credentials in this industry. What I do have is experience of it on the agency side, a naïve perspective and an enquiring attitude verging on WTF.
One thing about the article stood out to me: pharma, and medicine generally, insists on referring to the end-users of its products as patients. Everybody else calls us consumers. This is at the heart of the myopia that will be pharma’s undoing.
The healthcare world is spinning really fast right now and pharma is still cycling on a previous revolution.
As individuals, let’s be honest, we consumers hate the idea of pharma. We have no intention of needing pharma products, and we’ll do whatever we can to stay away from them – including choosing surgery over drugs if we can. Whatever we can do to avoid being ill is worth doing, and our inclination to take proactive steps in this direction is growing.
Simplistically, and using a bit of future forecasting, the more we learn about our tendencies towards disease, the more we look for information about how to stop it.
The data to feed an effective scenarios planning exercise would include that generations X and Y are buying into the idea of their genomic profiles telling them their health predispositions; that allowing health services to access our profiles will allow them to help us too; that dietetics is helping us to know how to eat to mitigate specific risks; that diet supplementation is getting sophisticated; that AI will augment our ability to interpret information in any way we choose; and that the traditional supply chain has broken links all the way along it.
Medicine and pharma decry claims like this, but the evidence in support of using foods to mitigate disease over long-term regimens, for example, is strong. New consumers to the market are questioning old advice, and FMCG product development is responding to market demand. Overall, we’re getting better at finding personalised and optimal nutrition, and consumer-centric solutions are appearing. From our position, this is great and talks to the power of Design Thinking as a way of helping develop innovation strategies.
You might expect the pharma industry to be completely consumer-centric (or patient-centric) and it may have been. But the cynical view is that it’s now more concerned with fiduciary matters. It’s true that the way pharma is forced to interact with us requires it to make hugely expensive safety trials and its permissible claims are highly controlled, but consumers are an inventive lot.
The supply chain for licensed drugs is under threat and consumers are finding ways to access them without consulting traditional prescribers. As our lives become more directed by artificial intelligence and our access to useful databases improves, the information that we need to treat ourselves is easier to find and understand. There may be no substitute for expert intervention in some cases, but the necessity for PCP input is increasingly being avoided.
Hand-in-hand with this is the language of pharma. By knowing what we need to do to minimise our individual health risks, we also look for a newly framed argument.
For years, industries have battled with the European Food Safety Authority (EFSA) when preparing products for market. EFSA, with the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) and Advertising Standards Authority (ASA), forms a formidable, if overworked, body of enforcement. But suddenly the claims that they do permit have relevance. Broadly speaking, claims for food-based products that seek to sell into a pseudo-medical and health-oriented market can only claim to ‘support the normal health’ of a person. And this is exactly what consumers now want. We’re not looking for therapy and remedy. We want support, maintenance, and even performance enhancement.
Pharma can’t cope with this. The idea that people don’t seek solutions through traditional routes to health diagnosis is unthinkable.
In one of my roles, I assess applications for grants to pay for development work in medical and surgical disciplines. Applications can range from the ridiculous to the inspired, and these also lend credence to the problem that pharma faces. With access to the work that visionaries are doing in surgical disciplines such as orthopaedics, it is easy (really easy) to envisage a time when the structure, plumbing and some of the wiring in the human body can be replaced, modified and enhanced better than today. This too represents a challenge for pharma.
Finally, there are two age-based issues conspiring to drive pharma into a corner: life expectancy is increasing and new market entrants are digitally native.
With life expectancy extending to 100 years+ and the active working lifespan estimated at over 80 years, the age of peak incidence goes out too. This means that conditions developing at, say, 60 years of age, will soon occur later in a life that lasts longer overall.
For new pharmaceutical products in development now, with a limited patent protection period (typically 20 years), there is a predictable drop in usage. As these new-age consumers access better genomic information, with AI-derived advice and with personal monitoring permanently augmented, not only will they see their own health issues developing, they’ll get closer to a diagnosis themselves, and know how to handle it.
Last week’s blog looked at innovation not happening by accident. For pharma, this is absolutely key. Until it realises that its commercial model is seriously threatened, it simply can’t develop the objectivity it needs to recreate itself.
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